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Our Bureau

Chennai , Oct. 12

Efforts to revive Madras Fertilizers Ltd (MFL) continue with the option to merge it with a cooperative or public sector fertiliser unit under study.

According to information provided by the company to the stock exchange, Rashtriya Chemicals and Fertilizers Ltd (RCF) is engaged in a due diligence at MFL.

Sources in the know say that RCF was the fourth cooperative fertiliser unit to carry out a due diligence at MFL.

The National Fertilizers Ltd, Gujarat State Fertilizers & Chemicals Ltd and Krishak Bharati Cooperative Ltd had conducted a limited due diligence last year. But there has not been any further developments, they said.

They said the fertiliser pricing policy was to be blamed and not the operations of MFL, which in itself were efficient. According to representatives of the Madras Fertilizers Ltd Staff Union, at a recent meeting of the cooperative fertiliser units, MFL and the Fertiliser Ministry, the cooperative units had sought a change in the fertiliser pricing policy, which was considered the primary reason for MFL running up losses.

It may be recalled that, at the company's annual general meeting last month, officials had said that its net worth had been wiped out and its losses were over Rs 400 crore as of March 2006 and Rs 455 crore as of August. The losses are expected to mount by an additional Rs 100 crore during the current year, when the next stage of the urea pricing policy takes effect and urea pricing support is further cut.

Officials and the representatives of the foreign promoter, Naftiran, had also blamed the fertiliser pricing policy introduced in April 2004. Naftiran also declined to bring in more funds.

The workers' representatives said they would support any move to merge MFL with a cooperative or a public sector unit. But with the pricing policy adverse to MFL, cooperative units are not keen on acquiring a loss-making unit.

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